"And I think it also rewards those who are prepared to make vexatious claims and it's something that all politicians need to be very aware of now."

He says he is the victim of vexatious claims and believes the party is over reacting because of other recent high-profile ICAC cases involving ALP members Ian Macdonald and and Eddie Obeid .

"You've got to say on the surface of it it looks to be a knee-jerk reaction," he said.

"We haven't even got into the first day of these particular claims and the like and I think they're just running a little scared of public perception."

ALP national secretary George Wright has told Sky News the national executive did not make any judgment about the ICAC investigation, but no longer considered Mr Salvestro-Martin a viable candidate.

"The Prime Minister has made it really clear that we need to have candidates that are beyond reproach. We've acted today," he said.

He said it was a decision in the interests of the party and voters.

"We don't think it is appropriate that a person who is going through that investigation now with the federal election looming is an appropriate person to be standing as our candidate in Bennelong," he said.

The ICAC inquiry is investigating allegations the Ryde councillors received undisclosed political donations in the form of election advertising in the lead up to the 2012 local government elections.

It is also investigating claims they released confidential information to undermine council employees, including former general manager John Neish.

Bennelong is held by Liberal MP John Alexander and was the seat of former prime minister John Howard.